The dollar continued its ascent for a third day, nearing its strongest point this year. Soaring energy prices are fueling inflation worries, prompting speculation that central banks might reconsider interest rate hikes.
The rapid increase in oil and gas prices poses a significant risk to global economic growth. Currencies of major energy importers have seen substantial losses against the dollar, with the Indian rupee and Japanese yen declining over 1.5%, and the euro and Korean won falling 2% and 3% respectively.
The dollar's strength, up over 1.5% against a basket of major currencies, is partly attributed to its safe-haven status and the United States' position as a net energy exporter.
Brent crude futures saw a significant spike, surpassing $101 per barrel, even after international agreements to release oil from strategic reserves. European natural gas prices have surged approximately 70% since the start of recent conflicts.
Market participants are reassessing interest rate expectations. Traders anticipate the European Central Bank may raise rates as early as June, while the U.S. Federal Reserve's rate cut is now projected for September, a shift from earlier expectations.